1989 (10) TMI 235

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....l erred in law in allowing the entire amount of the provident fund contribution to the agricultural staff, gratuity paid to the agricultural staff, and 1/3rd gratuity paid to the head office staff without apportioning the same between the expenditure as attributable to the agricultural activities and those attributable to business activities, in computing the total income of the assessee-company for the assessment years 1962-63 to 1966-67?" 2. The assessee-company owns a sugar mill. It also owns sugar farms and grows sugarcane. Its business is that of manufacture of sugar involving activities which are partly agricultural and partly non-agricultural. The proceedings relate to assessment years 1962-63 to 1966-67 (both inclusive). The a....

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.... for the department, submitted that the assessee- company was carrying on agricultural activity as well as running an industry in so far as it was manufacturing sugar from the sugarcane. The cost of sugarcane in the hands of the assessee was taken to be the cost of growing sugarcane as well as all other expenses incurred in connection therewith. Income arising from such an activity was treated as agricultural income and was liable to agricultural income-tax. A part of that expenditure could not also be allowed as deduction while computing the assessee-company's business income. As regards the decisions relied upon by the Tribunal, Shri Jetley stated that the expenses involved in those cases were expenses which were paid to the staff mai....

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....e is an industry and is, therefore, liable to pay bonus to its agricultural staff. The Tribunal has, on that basis, given a finding in paragraph 4 of its order to the effect, viz., that the assessee-company constitutes an industry, for that reason the workers were entitled to bonus, and as such the claim of the assessee to deduct amounts paid as bonus even to the agricultural staff and workmen was an allowable expenditure. Accordingly, we are in agreement with the Tribunal that but for the fact that the assessee was an industry, the assessee would not have been liable to pay bonus to the agricultural staff and workmen. The payment having been made in the capacity as owner of industry as distinct from owner of a agricultural farm, the same w....